City considering selling part of Phoenix Convention Center
Phoenix is considering selling part of the Phoenix Convention Center to make way for a major private development on one of the most prominent pieces of real estate in downtown.
Officials have been toying with the idea of selling the south building of the convention center for more than a year. Later this summer, they plan to host a series of community meetings to see what convention attendees and nearby residents think of the idea.
Developer got council thinking
In late 2017, international developer Hines submitted a proposal to the city asking to purchase five city-owned parcels, including the south hall. It wanted to create an entertainment and cultural district with office, retail, cultural amenities and more.
Days after the proposal became public, a City Council subcommittee said the city needed to re-evaluate its convention center plans before moving forward.
“We are supportive of the city process and if they choose to issue a redevelopment proposal, we will evaluate the opportunity.”
Chris Anderson Senior Managing Director, Hines
Hines withdrew its proposal.
Text messages obtained by The Arizona Republic show that representatives of the developer have continued to meet with council members and city department heads to discuss the proposal.
Other major developers are expected to make a bid on the land, too, if the council decides to move forward with redevelopment.
Convention expansion not possible
Phoenix built the north and west buildings of the convention center in the early 2000s as part of a $600 million expansion. Those buildings are north of Washington Street between Second and Fifth streets and connected underground and by an aerial bridge.
At the time, the city planned to expand the north building underground to connect with the existing south building, which was built in 1985. But the economic downturn dried up funds.
Today, an underground connection is no longer possible for a number of reasons, including light rail’s existence on Washington Street, according to John Chan, Phoenix Convention Center director.
This prompted the city to start looking at other plans for the building.
The south building has about 143,000 square feet of rentable space and is booked 218 days a year, Chan told a council subcommittee in May.
The majority of the events held in the south building are smaller local events, such as dance tournaments, bridal expos and local association meetings. It’s unclear if the remaining convention center buildings have the capacity to absorb all of these events if the south building is redeveloped.
Chan said the south building center generates about $2 million a year in direct revenue and costs about $1 million to operate. It provides an additional $1 million economic impact from convention attendees and exhibitors who spend money in and around the convention center, he said.
The south building spreads across more than nine acres between Washington and Jefferson streets and Third and Fifth streets.
The site is considered a “super block” as it is twice as large as a normal city block. It is slightly larger than CityScape, a high-rise, mixed-use development just a few blocks to the west. That development brings in $6 million in revenue to the city annually, Community and Economic Development Director Chris Mackay said.
Council members tried to rush process
After Chan and Mackay’s presentation at the May meeting, some members of the City Council said they wanted to issue a formal request for proposals immediately, which would allow developers to start submitting their ideas for the land.
Councilman Michael Nowakowski and then-Councilwoman Felicita Mendoza said they wanted to issue the request before the council’s summer break, which began July 3, so they could select a developer quickly when they returned to work.
Nowakowski said he wanted to look at the south building as a “business opportunity.” He said replacing it with a development that rivals CityScape would mean more revenue for the city.
But other council members and city staffers encouraged the council to conduct community outreach before they opened up the land for developer proposals.
Councilwoman Laura Pastor said the city needed to conduct public meetings before moving forward on the south building to see whether the community wants the convention center redeveloped and, if so, what they’d like to see on the prominent piece of land.
She said she believed the push to move so quickly was “driven by a developer’s agenda,” seemingly referring to Hines.
According to text messages and emails obtained by The Republic through a public records request, Hines representatives were meeting with council members leading up to the May meeting.
In an interview in July, Hines’ Phoenix-based zoning attorney Nick Wood confirmed that Hines was encouraging the council to move quickly and issue a formal request for proposals prior to its two-month summer break.
But, he said he understands why the council wanted to slow the process to allow time for public input.
Hines Senior Managing Director Chris Anderson said in a statement, “We are supportive of the city process and if they choose to issue a redevelopment proposal, we will evaluate the opportunity.”
Houston-based Hines has developed some high-profile projects in the Valley, including the former corporate headquarters of U.S. Airways in downtown Tempe and the mixed-use project on the southwest corner of 24th Street and Camelback Road near the Biltmore in Phoenix.
Wood is one of the most prolific zoning attorneys in Phoenix. He’s responsible for many of the high-rise developments downtown, including the planned 1.1 million-square-foot project, approved by the council earlier this year, that will replace the Phoenix Central Station between the Van Buren Street light rail platforms.
Hines is still interested
Text messages and emails show that Wood and Steve Betts, a local developer who was working with Hines on the proposal, have continued discussions with the council and department heads about the proposal.
In an April 5 text message, just weeks after Mayor Kate Gallego was inaugurated, Wood followed up on a meeting he had with Gallego and Betts about the Hines proposal.
“If you have some time today or even over the weekend, I’d like to get on the phone with you for a few minutes and distill this down to its basic parts. That way you can make an informed decision on whether you want to go forward with the RFP,” Woods texted Gallego.
She did not respond. In April, Betts was also intermittently texting Pastor and Councilwoman Debra Stark about the project.
“It seems that maybe I have failed to get city leaders to see and want enough a great placemaking street like many cities have,” Betts texted Stark in April. “I truly thought this win-win-win-win for my city easily warranted the need to work out department staff’s natural institutional issues/concerns, and to sell it to community groups.”
It appears that these texts came after earlier meetings Betts had with Pastor and Stark.
In February, Betts text
ed Mackay, the city’s economic development director, updates on those meetings.
“I’ll catch you up on Laura’s thoughts whenever you call later today,” Betts texted Mackay on Feb. 10.
Later that day, he texted her again, asking “Did Laura seem to concur with my read of our chat?”
Mackay didn’t respond.
“My chat with Deb went very well. Maybe you or I can encourage (City Manager Ed Zuercher) to chat with her before your meeting Tues,” Betts texted on Feb. 16.
Mackay didn’t respond to the question but said she’d call Betts later that week.
Other proposals likely
If the council decides to move forward with redevelopment, Hines likely will not be the only developer interested in the land.
But it likely will be the developer that had the most time to work on a proposal, given its early attempt at securing the land in 2017 and continued conversations with council members.
Could that give the Hines project a leg up?
Wood said no, because Hines’ initial proposal was public and any other developer could have seen it and started hashing out its own proposal.
“Because it was public, any other developer who has had an interest in this I’m certain has been working on their own plans the whole time in anticipation that a formal (request) will be issued,” Wood said.
He said Hines plans to attend the community meetings and refine its proposal to match community needs.
Community meetings
❚ July 24, 8:30 a.m., Helen Drake Community Center, 7600 N. 27th Ave. Parking available at the community center.
❚ July 31, 10 a.m., Phoenix Convention Center West Building, Room 211 A & B, 100 N. Third St. Parking available at West Garage on the southeast corner of 2nd and Monroe streets.
❚ Aug. 7, 5:30 p.m., Broadway Heritage Resource Center, 2405 E. Broadway Road. Parking available at the resource center.
❚ Aug. 15, 1 p.m., Phoenix Convention Center West Building, Room 211 A & B, 100 N. Third St. Parking available at West Garage on the southeast corner of 2nd and Monroe streets.
❚ Aug. 19, 5 p.m., Phoenix City Hall, Assembly Rooms A & B, 200 W. Washington St. Parking available at the 305 Garage, 305 W. Washington St.
❚ Aug. 21, 9 a.m., Public open house tour of PCC South Building, (meet in lobby), 33 S. Third St. Parking at East Garage, 601 E. Washington St.
❚ Aug. 21, 5 p.m., Phoenix Convention Center West Building, Room 211 A & B, 100 N. Third St. Parking available at West Garage on the southeast corner of 2nd and Monroe streets.